Growth is important for businesses to enable them to flourish and be successful. Business growth, if successfully managed, has many advantages. These could be increased profits, a larger customer base – potentially giving the company more security as they are not dependent upon just a few customers, and cost savings. With growth come economies of scale and a company can potentially buy more cheaply because they are buying in greater quantities.
With growth may come diversification either in terms of markets, products, or services and this too can be beneficial for business.
Growth can enable a company to overtake its competition and become the dominant player in the market. However, it is important that growth is controlled and done at a pace that enables the business to remain profitable and trading successfully.
A good plan ensures control over your business growth
Business growth must be planned in advance of taking any steps which might impact the business in a negative way. Growth must be controlled so the business does not grow so quickly that the costs of expansion overtake the revenue coming into the business leaving it struggling to pay its creditors.
Business owners who do not understand the components of a strategy that correctly aligns their strategy to their business goals are likely to fail and therefore it is vital to plan growth carefully from the outset. Therefore, to enable successful growth, it is important to return to some familiar business planning tools to ensure the growth of a business runs as smoothly as possible.
How to plan your business growth strategy
Stephen Covey’s well-known words ‘begin with the end in mind’ sum up what each business owner should consider when planning their strategy. You should consider why you are doing your business, what is important to you about it and where do you want to get with your business i.e. business purpose.
Planning business milestones will help to turn any exit plan and vision into reality, by providing a road map for the future – a business strategy.
Take a timeline of say 5 years and broadly think about where you want to be with your business in that time. Then consider where you wish to be in 3 years’ time, 2 years’ time, 6 months, and then where you are now. To get you from now to 5 years’ time, it is more than likely you will wish/need to grow.
Your sales goals need to be aligned with the longer-term business goals and need to be relevant and achievable. The best practice is to continually review the relevance of its operations in the context of the external business environment and amend its plan where appropriate. Business growth can also happen in different areas of the business e.g. visualize how you might achieve your growth in terms of people, finance, location, diversification, new markets, etc.
What is your business objective?
Consider what your overall objective is for the business and how well the current structure of the company supports this. Which areas work well and which areas do not support the business objective? How could this be improved? Set up a structure that supports your ultimate goal and document this! Set targets and milestones for each area of the business towards your overall objective. Have checks and balances in place to enable you to trace progress against any targets you may have set.
How can you grow your business?
There are different ways of growing the business. You could grow it organically through the business’s own resources by increasing sales, taking on new customers, new product lines, a new geographical area, different sales channels, generating greater volume through bigger markets, and customers.
Other ways of growing the business may require outside support and the company may choose to take on a loan, business grant, asset finance, crowdfunding, or the numerous other ways that may be considered to support the growth of the business. With this comes an element of risk and this must always be taken into consideration and balanced against your ultimate goals for the business.
It is always important to monitor the finances and look at forecasts and cash flow. This is especially important in the recent times we have been living with Covid. Considering business risk, as well as opportunity, is key, and being able to respond quickly to any changes in circumstance and monitor this is very important. Plan your capacity and do not overstretch.
What skills do you need to grow your business?
Growth can be a challenge for a business but it can also be extremely exciting. Business growth can come with new skill requirements – for example taking on your first employee. It will be important to consider competition which you may not have had to consider before. As you successfully grow, competitors will notice and watch you, so you too must do this. It will be important to ensure you are equipped with the new skill sets required for growth.
With successful growth also comes confidence. However, growth is hard work too and it will be important that as you take on new roles that you make sure you continue to consider yourself, your well-being and make time for you. Don’t underestimate the new challenges! Seek out as much help and support as possible, as you undertake this exciting new challenge. Start and Grow Enterprise is the ideal place to seek such support – where experienced mentors, coaches, and advisors are on hand to enable you to navigate this exciting new pathway.
What are the benefits of growing your business?
Expanding your target market, products, operations or location comes with an element of risk but if your competitors are changing then it may be that you must too. Lifecycle and market demand should be taken into consideration when looking to grow the business.
Once on the path to growth, the advantages can be huge. There is the opportunity for differentiation and the potential opportunity to move into new markets. You will be spreading your risk, but always balancing this against the costs of doing this and considering if you are moving into new markets with a new product how this might affect your brand identity. Depending on the type of business you are in, growth through innovation will potentially lead to stronger brand identity.
How can you ensure successful business growth?
With growth, if managed successfully, can come stability, offering more peace of mind for the business owner. The perception of the company, as it expands and grows, will also potentially be seen within the marketplace as one that is succeeding as it is expanding.
However, a word of caution must be voiced here. The outward perception may not always reflect reality and this is where the importance of controlled, planned and well-managed growth is key. Not taking on debts that the company cannot serve and not stretching itself to such an extent that it overtrades, which is why it is critical to monitor the impact on the financials at every stage of growth.
Growth can spread your risk and decrease dependency upon one particular customer or market. If managed well, your profits will increase. Successful companies attract better people. However, caution must always be exercised throughout the growth period. Risks and opportunities must be monitored to avoid any drops in quality as you expand. As a business owner as you grow, you may lose the tight hands-on control that you once had on every area of your business, so this must be borne in mind.
Above all, as you grow, financial planning remains a key requirement. Embrace the opportunity to grow, but at the same time ensure you understand the reasons why you are growing – where possible to increase stability and reduce risk rather than inviting in risks that are too great. At all times, understand your business, your market, and any current threats and opportunities. Planning and monitoring in all areas of your business are key to successful growth as well as having the ability to react quickly when unanticipated change happens.
This article is written by Liz Wyn-Davies, Director at Manago. Liz is a Business and Personal Coach and qualified Lead Auditor and consultant in ISO Standards (9001, 14001 and 45001) in Quality, Environmental, and Health and Safety. Contact Liz here.